Share prices are edging higher today, with the S&P/ASX 200 Index (ASX: XJO) up 0.9% in afternoon trading.
This comes despite bearish forecasts that Australian shares would follow United States' share markets lower after President Donald Trump torpedoed ongoing negotiations for the next big US stimulus package. These forecasts saw the ASX 200 fall 0.3% in the first 20 minutes of trading.
But the Morrison government's own huge stimulatory budget, released last night, clearly trumps Trump's tweet that US stimulus will have to wait until after 'he wins' the presidential election on 3 November.
The ASX shares not making budget related headlines
The budget Treasurer Josh Frydenberg unveiled last night is chock full of personal and business tax breaks, and numerous multi-billion-dollar spending programs targeting the manufacturing and energy sectors, among others.
The aim is to put money back into people's and companies' pockets and to create jobs.
Little wonder then that many analysts are citing potential share price gains in energy, financial, infrastructure and retail (particularly online retail) shares.
What you won't see much of during these early budget analysis days is the long-term gains still offered by beaten down shares in the hospitality and travel space. That's because no amount of fiscal stimulus is going to fully revitalise these industries until the coronavirus is truly contained.
For investors to reap the potential large gains on offer, they'll need to be patient.
Air travel gutted
One area that's been particularly hard hit is air travel.
The International Air Transport Association forecasts that global air traffic in 2020 will be 66% less than it was in 2019. Worse, the Association reported that domestic traffic in Australia was down 91.5% in August.
Ouch.
With those statistics in mind, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has actually fared pretty well. After losing 48% in the February and March share market panic, the Sydney Airport share price has rebounded 31% to date.
That still leaves the share price down 32% from the 17 January peak.
And therein lies the longer-term opportunity.
For the Sydney Airport share price to return to its January levels, it will need to gain 47% from today's price of $5.97 per share.
Now it's not going to do that before domestic and international travel returns to pre-pandemic levels. In fact, the share price is down 0.3% today despite the broader market gains.
But if you believe, as I do, that COVID will be beaten within the next year and air traffic will return, or exceed, 2019 levels with 2 to 3 years, then Sydney Airport shares today look like an enticing bargain.